Point-of-sale (POS) devices are used by merchants to perform transactions using customers' credit cards and other payment instruments. At and/or after the time of a purchase, a purchase transaction is implemented in a process that involves authorization, capture, and settlement of a transaction amount.
For payment instruments such as credit cards and debit cards, the transaction process involves several entities, including an issuing bank, an acquiring bank, and a card payment network. The issuing bank is the bank that issues the payment instrument. The acquiring bank is the bank that accrues merchant funds on behalf of the merchant. The card payment network, sometimes referred to as a card network, coordinates transactions and settlements between the various entities. Visa®, MasterCard®, American Express®, and Discover® are examples of well-known card payment networks.
Generally, each of the entities mentioned above charges a fee for each transaction, and the various fees are passed to the merchant. For example, the payment network may charge a fixed fee for every transaction. As another example, the issuing bank charges what is known as an interchange fee. The amount of the interchange fee is variable as a function of numerous attributes of a transaction.